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TMI Blog1958 (9) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ible to it under section 23A which brought the dividend declared to the statutory requirement of 60 per cent. of its income. The assessment of the company was made on the 30th January, 1956, and the company claimed a rebate of one anna per rupee on the undistributed balance of the profits as provided in clause (i) of the proviso to item B of Part I of the First Schedule to the Finance Act, 1955. This rebate was disallowed both by the Income-tax Officer and the Appellate Assistant Commissioner, but was allowed by the Tribunal and the question has now come before us on this reference, and what calls for our decision is the interpretation of really one short expression in this provision in the Finance Act. The provision is in the following wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;is not made applicable"? Looking to the scheme of section 23A it is clear that what the Legislature intended by using the expression was to provide that it is only in those cases where section 23A cannot be made applicable, in other words, it is only in those cases where the conditions, which are required by section 23A itself before an order can be made under it are not present that the necessary relief cannot be granted. Turning to the scheme of section 23A, sub-section (1) deals with the distribution of dividends and the first condition laid down is that the distribution of dividends is less than the statutory percentage Even so the power of the Income-tax Officer would only arise if he is satisfied that the payment of a dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, and therefore this company cannot be taken out of the categories of companies to which section 23A applies by reason of sub-section (9). It is therefore a company to which section 23A does apply, and Mr. Joshi's contention is that if this is a company to which the provisions of section 23A apply, then the right of claiming the rebate cannot be exercised by the assessee company. The fallacy underlying this argument is to equate the fact of the section applying to the company with the provisions contained in the Finance Act that the section cannot be made applicable to this company. Even though the assessee company is a company to which the section applies, even so by reason of the fact that the conditions laid down in that section hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make the order. Therefore, if the conditions are not present and the Income-tax Officer could not have made the order, the assessee company is entitled to the rebate. Mr. Joshi relied on a decision of this court in Shee Changdeo Sugar Mills Ltd. v. Commissioner of Income-tax [1956] 30 ITR 417 . In that case we rejected what we called an ingenious argument of Mr. Palkhivala that it was not sufficient to decide whether the company was one in which the public were interested in order to decide whether section 23A was applicable or not, but we should go further and find out whether the company had made profits, whether it had not distributed 60 per cent. of its dividends, and apply all the provisions contained in sub-section (1) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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